LONG-RUN BUDGET PROJECTIONS OF 2007 BUDGET POLICY: 2000-2080
(Percent of GDP)
-------------------------------------------------------
2000 2010 2020 2030 2040 2060 2080
-------------------------------------------------------
Receipts........... 20.9 17.9 18.9 19.4 20.0 21.3 22.4
Outlays............ 18.4 18.9 19.4 21.6 23.6 28.2 36.1
Discretionary.... 6.3 6.1 5.6 5.6 5.6 5.6 5.6
Mandatory........ 9.8 10.8 12.4 14.4 15.7 17.8 21.0
Social Security 4.2 4.2 4.9 5.8 5.9 6.1 6.4
Medicare....... 2.0 2.8 3.7 5.0 6.1 7.9 10.4
Medicaid....... 1.2 1.5 1.9 2.1 2.3 2.8 3.3
Other.......... 2.4 2.3 1.9 1.6 1.4 1.1 0.9
Net Interest..... 2.3 1.9 1.4 1.5 2.3 4.7 9.4
Surplus/Deficit (-) 2.4 -1.0 -0.6 -2.2 -3.6 -6.9 -13.7
Primary Surplus/Def 4.7 0.9 0.9 -0.6 -1.3 -2.1 -4.2
Debt Held by Public 35.1 37.5 26.2 28.8 43.3 88.6 177.4
===========================================================================
LONG-RUN BUDGET PROJECTIONS OF 2007 BUDGET POLICY: 2000-2080
(Percent of Receipts)
-------------------------------------------------------
2000 2010 2020 2030 2040 2060 2080
-------------------------------------------------------
Receipts........... 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Outlays............ 88.0 105.6 102.6 111.3 118.0 132.4 161.2
Discretionary.... 30.1 34.1 29.6 28.9 28.0 26.3 25.0
Mandatory........ 46.9 60.3 65.6 74.2 78.5 83.6 93.8
Social Security 20.1 23.5 25.9 29.9 29.5 28.6 28.6
Medicare....... 9.6 15.6 19.6 25.8 30.5 37.1 46.4
Medicaid....... 5.7 8.4 10.1 10.8 11.5 13.1 14.7
Other.......... 11.5 12.8 10.1 8.2 7.0 5.2 4.0
Net Interest..... 11.0 10.6 7.4 7.7 11.5 22.1 42.0
Surplus/Deficit (-) 11.5 -5.6 -3.2 -11.3 -18.0 -32.4 -61.2
Primary Surplus/Def 22.5 5.0 4.8 -3.1 -6.5 -9.9 -18.8
Debt Held by Public 167.9 209.5 138.6 148.5 216.5 416.0 792.0
===========================================================================
LONG-RUN BUDGET PROJECTIONS FROM 2001-2007 BUDGETS
(Percent of GDP)
-------------------------------------------------------
2000 2010 2020 2030 2040 2060 2080
-------------------------------------------------------
2001 Receipts...... 20.4 19.1 19.3 19.5 19.7 19.9 20.0~
2002 Receipts...... 20.6 18.6 18.6 18.7 18.7 18.8 18.7~
2003 Receipts...... 20.8 19.2 19.2 19.4 19.4 19.6~ 19.6~
2004 Receipts...... 20.8 18.4 18.8 19.0 19.0 19.2 19.3
2005 Receipts...... 20.9 17.9 18.6 19.0 19.5 20.6 21.6
2006 Receipts...... 17.7~ 17.7~ 18.8~ 19.4~ 19.9~ 21.2~ 22.3~
2007 Receipts...... 20.9 17.9 18.9 19.4 20.0 21.3 22.4
-------------------------------------------------------
2000 2010 2020 2030 2040 2060 2080
-------------------------------------------------------
2001 Outlays....... 18.7 16.7 17.3 18.9 20.0 23.3 31.7
2002 Outlays....... 18.2 15.8 16.1 17.7 19.3 23.7 31.4
2003 Outlays....... 18.4 18.0 18.4 20.4 22.3 27.7 34.4
2004 Outlays....... 18.4 19.6 21.0 24.4 27.8 36.7 52.7
2005 Outlays....... 18.4 19.3 20.3 24.1 28.2 37.7 53.2
2006 Outlays....... 20.5 19.9 20.6 23.3 26.2 33.0 43.1
2007 Outlays....... 18.4 18.9 19.4 21.6 23.6 28.2 36.1
-------------------------------------------------------
2000 2010 2020 2030 2040 2060 2080
-------------------------------------------------------
2001 Discretionary 6.5 5.1 4.7 4.4 4.0 3.3 2.8
2002 Discretionary 6.3 5.2 5.0 5.0 5.0 5.0 5.0
2003 Discretionary 6.3 6.2 5.8 5.8 5.8 5.8 5.8
2004 Discretionary 6.3 6.5 6.0 6.0 6.0 6.0 6.0
2005 Discretionary 6.3 6.2 5.4 5.4 5.4 5.4 5.4
2006 Discretionary 7.7 6.9 5.9 5.9 5.9 5.9 5.9
2007 Discretionary 6.3 6.1 5.6 5.6 5.6 5.6 5.6
-------------------------------------------------------
2000 2010 2020 2030 2040 2060 2080
-------------------------------------------------------
2001 Mandatory..... 9.9 11.1 13.3 15.6 16.7 19.1 23.1
2002 Mandatory..... 9.7 10.3 12.1 14.1 15.2 17.2 19.9
2003 Mandatory..... 9.8 10.7 12.5 14.4 15.6 17.8 20.5
2004 Mandatory..... 9.8 11.3 13.2 15.5 16.8 19.0 22.8
2005 Mandatory..... 9.8 11.0 13.0 15.9 17.9 20.6 24.6
2006 Mandatory..... 10.5 11.3 12.7 14.8 16.4 18.8 22.1
2007 Mandatory..... 9.8 10.8 12.4 14.4 15.7 17.8 21.0
-------------------------------------------------------
2000 2010 2020 2030 2040 2060 2080
-------------------------------------------------------
01 Social Security. 4.2 4.5 5.7 6.7 6.8 7.2 7.5
02 Social Security. 4.1 4.2 5.3 6.2 6.3 6.5 6.9
03 Social Security. 4.2 4.4 5.4 6.3 6.4 6.6 7.0
04 Social Security. 4.2 4.3 5.3 6.2 6.4 6.6 7.1
05 Social Security. 4.2 4.2 5.0 6.0 6.2 6.5 6.8
06 Social Security. 4.4 4.3 4.9 5.7 6.0 6.2 6.5
07 Social Security. 4.2 4.2 4.9 5.8 5.9 6.1 6.4
-------------------------------------------------------
2000 2010 2020 2030 2040 2060 2080
-------------------------------------------------------
2001 Medicare...... 2.1 2.5 3.3 4.1 4.4 4.5 4.9
2002 Medicare...... 2.0 2.3 3.1 4.1 5.0 6.6 8.6
2003 Medicare...... 2.0 2.3 2.9 3.9 4.8 6.4 8.1
2004 Medicare...... 2.0 2.6 3.4 4.6 5.5 7.0 9.3
2005 Medicare...... 2.0 2.9 3.9 5.9 7.4 9.6 12.5
2006 Medicare...... 2.3 2.9 4.0 5.3 6.5 8.5 11.1
2007 Medicare...... 2.0 2.8 3.7 5.0 6.1 7.9 10.4
-------------------------------------------------------
2000 2010 2020 2030 2040 2060 2080
-------------------------------------------------------
2001 Medicaid...... 1.2 1.8 2.4 3.2 4.0 6.2 9.4
2002 Medicaid...... 1.2 1.7 2.1 2.4 2.7 3.2 3.6
2003 Medicaid...... 1.2 1.8 2.2 2.4 2.7 3.2 3.7
2004 Medicaid...... 1.2 1.9 2.4 2.7 3.2 4.0 5.0
2005 Medicaid...... 1.2 1.7 2.1 2.4 2.7 3.3 4.1
2006 Medicaid...... 1.4 1.7 2.0 2.2 2.5 2.9 3.5
2007 Medicaid...... 1.2 1.5 1.9 2.1 2.3 2.8 3.3
-------------------------------------------------------
2000 2010 2020 2030 2040 2060 2080
-------------------------------------------------------
01 Other Mandatory. 2.4 2.3 2.0 1.7 1.5 1.3 1.2
02 Other Mandatory. 2.4 2.0 1.7 1.4 1.2 0.9 0.8
03 Other Mandatory. 2.4 2.3 2.0 1.8 1.7 1.6 1.5
04 Other Mandatory. 2.4 2.4 2.1 1.9 1.7 1.5 1.4
05 Other Mandatory. 2.4 2.3 1.9 1.7 1.5 1.2 1.1
06 Other Mandatory. 2.5 2.4 1.9 1.6 1.4 1.2 1.0
07 Other Mandatory. 2.4 2.3 1.9 1.6 1.4 1.1 0.9
-------------------------------------------------------
2000 2010 2020 2030 2040 2060 2080
-------------------------------------------------------
2001 Net Interest.. 2.3 0.5 -0.8 -1.1 -0.7 0.9 5.8
2002 Net Interest.. 2.3 0.3 -1.1 -1.4 -0.9 1.5 6.6
2003 Net Interest.. 2.3 1.1 0.1 0.2 0.9 4.0 8.1
2004 Net Interest.. 2.3 1.8 1.8 2.9 5.0 11.7 23.9
2005 Net Interest.. 2.3 2.1 1.8 2.7 4.9 11.7 23.2
2006 Net Interest.. 2.4 1.7 2.0 2.6 4.0 8.3 15.1
2007 Net Interest.. 2.3 1.9 1.4 1.5 2.3 4.7 9.4
-------------------------------------------------------
2000 2010 2020 2030 2040 2060 2080
-------------------------------------------------------
2001 Surplus/Def(-) 1.7 2.4 2.1 0.6 -0.3 -3.4 -11.7
2002 Surplus/Def(-) 2.4 2.8 2.5 1.0 -0.5 -4.8 -12.8
2003 Surplus/Def(-) 2.4 1.2 0.8 -1.1 -2.9 -8.2 -14.9
2004 Surplus/Def(-) 2.4 -1.2 -2.2 -5.4 -8.8 -17.5 -33.5
2005 Surplus/Def(-) 2.4 -1.4 -1.7 -5.0 -8.7 -17.2 -31.6
2006 Surplus/Def(-) -2.9 -2.2 -1.8 -4.0 -6.3 -11.8 -20.8
2007 Surplus/Def(-) 2.4 -1.0 -0.6 -2.2 -3.6 -6.9 -13.7
-------------------------------------------------------
2000 2010 2020 2030 2040 2060 2080
-------------------------------------------------------
01 Prim Surplus/Def 4.0 2.9 1.3 -0.5 -1.0 -2.5 -5.8
02 Prim Surplus/Def 4.7 3.1 1.5 -0.4 -1.5 -3.3 -6.2
03 Prim Surplus/Def 4.7 2.2 0.9 -0.9 -2.0 -4.1 -6.8
04 Prim Surplus/Def 4.7 0.6 -0.4 -2.5 -3.8 -5.8 -9.6
05 Prim Surplus/Def 4.7 0.7 0.1 -2.3 -3.8 -5.5 -8.4
06 Prim Surplus/Def
07 Prim Surplus/Def 4.7 0.9 0.9 -0.6 -1.3 -2.1 -4.2
-------------------------------------------------------
2000 2010 2020 2030 2040 2060 2080
-------------------------------------------------------
2001 Public Debt... 36.3 7.1 -15.1 -20.3 -13.3 18.8 112.4
2002 Public Debt... 34.7 2.3 -21.8 -27.5 -17.8 31.7 133.4
2003 Public Debt... 35.0 19.1 2.9 4.4 20.9 94.0 188.9
2004 Public Debt... 35.1 35.7 35.1 56.7 98.4 229.4 466.1
2005 Public Debt... 35.1 39.3 34.0 51.3 92.2 219.3 432.3
2006 Public Debt... 43.9 37.1 36.9 48.4 74.6 155.7 282.9
2007 Public Debt... 35.1 37.5 26.2 28.8 43.3 88.6 177.4
~ estimated via interpolation; corresponding values in following tables,
including all 2006 Budget projections, are likewise interpolated
Source: Budget of the United States Government, FY 2007,
Analytical Perspectives, page 185, Table 13-2;
Budget of the United States Government, FY 2006,
Analytical Perspectives, page 209, Table 13-2;
Budget of the United States Government, FY 2005,
Analytical Perspectives, page 191, Table 12-2;
Budget of the United States Government, FY 2004,
Analytical Perspectives, page 41, Table 3-2;
Budget of the United States Government, FY 2003,
Analytical Perspectives, page 45, Table 3-2;
Budget of the United States Government, FY 2002,
Analytical Perspectives, page 24, Table 2-2
Budget of the United States Government, FY 2001,
Analytical Perspectives, page 30, Table 2-2
===========================================================================
The above graphs and first two tables make evident the following points:
1) The debt held by the public is projected to drop to 26.2% of GDP by 2020.
It is then projected to climb, reaching 177.4% of GDP by 2080.
2) In 2004, receipts were 16.3% of GDP, their lowest relative level since
1959. They are projected to rise to 22.4% of GDP by 2080. This will
be their highest level since at least 1940, surpassing their prior high
of 20.9% of GDP reached in 1944 and 2000. Page 187 of the Analytical
Perspectives states: "This increase reflects the higher marginal tax
rates that people face as their real incomes rise".
3) Outlays are projected to drop from 20.1% of GDP in 2005 to 18.9% of GDP
by 2010. They are then projected to rise to 36.1% of GDP by 2080. Of
this 17.2% of GDP increase, 7.5% is Net Interest, 7.6% is Medicare, 2.2%
is Social Security, and 1.8% is Medicaid. As a percentage of GDP, there
is projected to be a drop of 1.4% in other mandatory spending and a drop
of 0.5% in discretionary spending.
4) By 2080, the deficit is projected to rise to 13.7% of GDP and, as a
result, the debt held by the public is projected to rise to 177% of
GDP. However, these figures are less than half of the two-year-ago
projections of 31.6 and 432 percent of GDP, respectively.
The remaining tables compare the projections from Clinton's final budget
(2001) and all of Bush's budgets. They make evident the following:
5) Receipts projected for 2080 dropped from 20% of GDP in the 2001 Budget
to 18.7% of GDP in the 2002 Budget. They were still projected to be a
relatively low 19.3% of GDP in the 2004 Budget but then rose sharply to
22.4% of GDP by the 2007 Budget.
6) Outlays projected for 2080 rose from 31.7% of GDP in the 2001 Budget to
53.2% of GDP in the 2005 Budget. They then dropped sharply to 36.1% of
GDP by the 2007 Budget.
7) Discretionary outlays are projected to stabilize at some percentage of
GDP after 2020 by the Bush budgets. This percentage varies from a low
of 5% of GDP in the 2002 Budget to a high of 6% of GDP in the 2004
Budget. The figures shown from the last Clinton Budget of 2001 assume
that discretionary spending will just grow with population and inflation.
8) Mandatory outlays projected for 2080 dropped from 23.1% of GDP in the
2001 Budget to 19.9% of GDP in the 2002 Budget. This 3.2% of GDP drop
was chiefly due to a 5.8% of GDP drop in projected Medicaid outlays.
There was also a 3.7% increase in projected Medicare outlays and a 0.6%
and 0.4% of GDP drop in Social Security and Other Mandatory outlays.
9) Mandatory outlays projected for 2080 then rose to 24.6% of GDP by the
2005 Budget. This 4.7% of GDP gain was chiefly due to a 3.9% of GDP
gain in projected Medicare outlays. Most of this gain (3.2% of 3.9%)
occurred in the 2005 Budget when the new Medicare prescription drug
benefit was first included in the projections.
10) Mandatory outlays projected for 2080 then dropped to 21% of GDP by the
2007 Budget. This 3.6% of GDP drop was chiefly due to a 2.1% of GDP
drop in projected Medicare outlays. The projections are now about 3%
of GDP less than the 2005 Trustees Report on which they were based.
More information on this difference can be found at promed07.html.
11) Net interest outlays projected for 2080 rose sharply from 5.8% of GDP
in the 2001 Budget to 23.9% of GDP in the 2004 Budget. Most of this
18.1% of GDP gain (15.8% of GDP) occurred in the 2004 Budget. The
projections then dropped to 9.4% of GDP by the 2007 Budget.
12) The deficit projected for 2080 rose sharply from 11.7% of GDP in the
2001 Budget to 33.5% of GDP in the 2004 Budget and dropped sharply to
13.7% of GDP in the 2007 Budget. The following table shows the makeup
of the 21.8% of GDP increase from 2001 to 2004 and the 19.8% of GDP
drop from 2004 to 2007:
COMPONENTS OF CHANGE IN DEFICIT PROJECTED FOR 2080
Component of change 2001-04 2004-07
--------------------- ------- -------
Receipts............. -0.7 3.1
Discretionary Outlays -3.2 0.4
Mandatory Outlays.... 0.3 1.8
Net Interest......... -18.1 14.5
--------------------- ----- ----
Deficit change....... -21.7 19.8
As can be seen, the largest component of the rise and fall in the
projected deficit is Net Interest. This shows how a relatively
small difference in annual receipts or outlays can cause a much
larger difference in net interest. This is because net interest is
based on the debt which is the accumulation of all past deficits.
13) The table above shows that the increase in projected receipts is the
largest non-interest contributor to the drop in the deficit projected
for 2080. On this topic, page 188 of the 2007 Analytical Perspectives
states:
"Over the last 40 years, for example, receipts have averaged 18.2 percent
of GDP. Tax receipts have risen above this ratio from time to time, most
recently at the end of the 1990s, but those periods of high taxes have
always been followed by tax changes that have restored the average tax
ratio. Although such changes require legislation and so are not implied
by current law, a plausible alternative is to hold the receipts ratio
constant relative to GDP. In that case, the deficit rises somewhat faster
than in the base assumptions."
The cause of the drop in projected Mandatory Outlays, the next largest
non-interest contributor to the drop in the projected deficit, is
discussed in point 10 above.
14) Similar to the deficit, the public debt projected for 2080 rose sharply
from 112% of GDP in the 2001 Budget to 466% of GDP in the 2004 Budget.
It then dropped sharply to 177% of GDP in the 2007 Budget.
